Hemp Enters Growing Season Against Backdrop of Moribund Prices

Thom Thompson

Thom Thompson

Editor

No one will be surprised to learn that the price of CBD-hemp has stayed in the basement, resisting any pull upward as the industry works through the 2019 crop inventory while new harvest beckons in the not too distant future. According to its June Hemp: Benchmarks and Analysis, the spot commodities trading platform PanXchange says it expects the new crop to be about the same size as last year’s supply. 

Planting of CBD hemp often begins indoors under highly controlled conditions that are favorable for either seed germination or propagation by cloning. Growing conditions in the U.S. are forecasted to be very positive for hemp. PanXchange’s most recent hemp report indicates that they expect the number of planted acres in the U.S. to fall although the number of farmers licensed to grow hemp has increased by more than 25%. 

I believe that the rise in the number of new growers indicates that experimentation by farmers is continuing. This is a particularly healthy sign – increasing numbers of growers are interested in hemp even after hemp prices went bust. The new producers are drawn to more than a quick buck. Rachel Berry, head of the Illinois Hemp Growers Association, for example, says she and her husband are planting some hemp for fiber alongside CBD-hemp for the first time.    

The decline in number of licensed acres is probably not significant to price development because it may reflect marginally productive land being taken out of production. Given that many more acres seem to have been licensed than were planted over the past few years, the decline in licensed acreage may also simply reflect better planning by growers.

The CBD hemp market is also seeing some innovation. The smokable flower market, discussed last month in the John Lothian Newsletter, is attracting controversy, according to PanXchange. It seems that traditional tobacco growing states are leading the way legislatively for permitting smokable hemp. North Carolina, Virginia and Tennessee permit the sale and consumption of smokable flower hemp. 

Kentucky, although a leader in both tobacco and hemp production, outlaws smokable flower hemp, ostensibly because of its close resemblance to marijuana for purposes of enforcement. And don’t try it in Iowa, which recently affirmatively outlawed possession and use. CBD itself is less restricted in commerce or use in those states.   

Background: Hemp for dinner  

Not your dinner; but maybe for your dinner’s dinner. Can hemp be fed to livestock?

More than just the quasi-medical supplement CBD, non-marijuana cannabis – hemp – has a potential myriad of uses that have not yet been much explored but which are also not entirely unknown. Canada and China have had sizable industrial hemp production for a number of years and consequently have developed some uses other than CBD.  

One such use is in livestock feed and meat production, which is a huge industry in the U.S. Much of that demand is satisfied by the similarly huge American soybean crop which is crushed into soybean oil and meal. Soybean meal has a protein content between 44% and 49%. Hemp seeds contain between 20% and 25% protein – 35% to 36% protein dehulled and crushed. Much more research needs to be conducted into the extent to which animals can tolerate hemp based feeds. There have been studies from time to time that showed that eggs from chickens fed hemp rich meal had healthier fat profiles than when they were fed other meals. 

Currently, hemp seeds that are used in animal feed are obtained as a by-product from hemp that is grown for fiber. I am not sure that there currently is much of a market in the U.S. for hemp meal, but it should be priced like soybean meal, that is, according to the amount of protein contained in the meal. 

Hemp grown for fiber has the reputation for not requiring synthetic fertilizers or pesticides, To the extent that the fiber crop can be produced organically, the attractiveness of its by-produced seeds as a feed for organic meat production would increase demand for hemp meal. 

There are numerous factors holding back hemp as a feed meal, but the biggest one is probably the pending certification of hemp as safe by the Association of American Feed Control Officials. With a green light from the association, meat producers will feel far more confident about feeding “cannabis” to their poultry and livestock. Hemp is a new crop and it may still take years to obtain full authorization.    

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